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To: trader14U who wrote (4566)3/5/1999 10:42:00 PM
From: realmoney  Read Replies (3) of 5300
 
Most, if not all convertibles work this way! The entity that gives money to a company has the right to convert the debenture at a strike price of between 20 and 30 percent of the current bid on the day of the conversion. Now follow me on this kids. The entity that does the debenture has a perfect need to and desire to short the subject company's stock!! They are getting a guaranteed cover at the very least 20 percent below the bid. Now, if they can drive the stock down further, they get to "cover" the short at a much better price. It becomes a self fulfilling prophecy. No stock has ever, I mean ever come back healthy once one of these things get done!! Yes, the co. gets the funds to carry out their business plan, but the stock always craps out. Any questions?
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